The Bangladesh Bank has formalised a decisive plan to liquidate six non-bank financial institutions (NBFIs) following a period of chronic mismanagement, systemic corruption, and severe financial irregularities. During a high-stakes board meeting held on 27 January, the central bank confirmed that these entities have reached an “unviable” state, primarily due to their inability to repay depositors and a catastrophic erosion of capital.
While six firms face immediate dissolution, the regulator has granted a three-month reprieve to three other struggling institutions: Bangladesh Industrial Finance Company (BIFC), GSP Finance Company, and Prime Finance and Investment Limited. These firms have been tasked with mobilising fresh capital and recovering a substantial portion of their defaulted loans. Failure to demonstrate significant progress within this ninety-day window will see them join the liquidation list.
A Sector Divided
The gulf between Bangladesh’s healthy and distressed financial entities is stark. Of the 35 NBFIs currently operating in the country, the central bank has categorised 20 as “distressed.” These troubled firms hold a combined loan portfolio of Tk25,808 crore, of which a staggering 83.16% is classified as defaulted. Conversely, the 15 sound institutions maintain a non-performing loan (NPL) ratio of just 7.31%, posting a collective profit of Tk1,465 crore last year.
The following table outlines the dire financial standing of the institutions slated for liquidation and those on probation:
| Institution Name | Defaulted Loans (%) | Accumulated Losses (Tk Crore) | Status |
| FAS Finance | 99.93% | 1,719 | Liquidation |
| Fareast Finance | 98.00% | 1,017 | Liquidation |
| International Leasing | 96.00% | 4,219 | Liquidation |
| People’s Leasing | 95.00% | 4,628 | Liquidation |
| Aviva Finance | 83.00% | 3,803 | Liquidation |
| Premier Leasing | 75.00% | 941 | Liquidation |
| BIFC | 97.30% | 1,480 | 3-Month Reprieve |
| Prime Finance | 78.00% | 351 | 3-Month Reprieve |
| GSP Finance | 59.00% | 339 | 3-Month Reprieve |
The Road Ahead
To facilitate this transition, the central bank will appoint administrators to oversee the winding-up process. A primary concern remains the Tk4,971 crore in net individual customer deposits held by the 20 troubled firms. The Bangladesh Bank has indicated that initial funding may be injected to support the restructuring and ensure that individual savers are protected.
Furthermore, the regulator has offered assurances to the workforce, stating that employees of the liquidated firms will receive their full entitlements and benefits in accordance with established service rules. This move marks one of the most significant “clean-up” operations in the history of the Bangladeshi financial sector, aimed at restoring public confidence and weeding out “zombie” institutions.